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mr Strategy Assignment : Lincoln Electric: Venturing Abroad 1. Lincoln's competitive advantage lies mainly in its effective compensation and benefits system which
Fields: The Big Five Accounting Firms, Academy of Management Journal, 49 (1), pp .28-48 Guba, E.G. & Lincoln, Y.S. (1981) Epistemological and Methodological Bases
Submitted by atat79 on November 11, 2005
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Strategy Assignment : Lincoln Electric: Venturing Abroad
1. Lincoln's competitive advantage lies mainly in its effective compensation and benefits system which put forth three main elements to spearhead the company's efforts. The trinity of elements comprised of piecework, bonus system and guaranteed employment. Piecework provided workers with a sense of autonomy in that now, workers can earn as much as they are willing to work for. The bonus levels in Lincoln far exceeded those of industry peers and were based on their contributions in the form of output, ideas, cooperation, dependability and quality. Consequently, the benefits provided by Lincoln were not extensive as they saw higher wages as substitutes for things such as insurance, and workers were also in a better position to decide their own benefits. All these elements combined gave workers a sense of ownership in the company and motivated them to work harder as entrepreneurs rather than mere workers. It also helped that Lincoln's managers strove to build a sense of trust with the workforce thereby reducing the need to form unions as well as enhancing their willingness to abide by company policies. This willingness is extremely important in James Lincoln's philosophy of offering guaranteed employment as a means to attain higher efficiency as workers are able to adjust to different economic situations by their willingness to modify their working hours and job designations. The trinity combined resulted in high productivity with an output 3 times higher than competitors with just half of their workforce. Coupled with the fficiency from continuous improvement in production process, employee effort and a seven-day-a-week equipment utilization meant Lincoln managed to generate huge cost savings. On top of that, Lincoln passed the cost savings on to its customers which created very high demand. The profits are then passed back to the workers, motivating them and sealing up a hugely successful...
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